March 30, 2009

Is A Brain Glitch To Blame For Financial Crisis?

Yes, but not that one.

CNN reports on a study:

"the real cause of the financial crisis could actually be down to a quirk of the human brain."

Take a moment a speculate on what you think that glitch might be.  Nope:

According to a new neurological study by Atlanta's Emory University, expert financial guidance causes the brain to switch off, disengaging from its usual rational decision-making process.

"It's almost as if the brain stops trying to make a decision on its own," Professor Gregory Berns, who led the research, told CNN.

"Normally, the human brain uses a specific set of regions to figure out the trade-offs between risk and reward, but when an 'expert' offers advice on how to make these decisions, we found that activity in these regions decreases."
Why would it be surprising to him that we trust experts?

I.

The study doesn't just find what brain regions are involved in decision making, it even quantifies the effect of expert advice on a person's choice.  But as good as the study is, the interpretation is flawed.  The brain glitch isn't that we trust experts.  The real brain glitch is the one that made him put scare quotes around the word "expert."

"Our brains will make the assumption that other people know more than we do," he said. 
He isn't saying, "hey, isn't it far out how our brains switch off in the presence of experts?"  He's saying, "why would you blindly follow these so called experts?"

The irony of he himself being an 'expert', and people blindly following him, is lost on him.

II.

He can't possibly be saying we shouldn't listen to experts, can he?

The point of having an expert is to trust his judgment.  If your judgment is nearly as good as his, than either he's not an expert, or you are. 

Being an expert entails more than simply amassing information; this is why having an internet connection and the first season of House does not make you a doctor.  It is why a Prescribatron will be a worse doctor both at the individual and the population levels (more on that someday.)

He must know that the average person could not hope to learn enough information on finance (or medicine, or law, etc) to be usefully critical of an expert's opinion.  (Or, the reverse: if you could, you'd be an expert.)  In keeping with "a little knowledge is a dangerous thing," not trusting the experts and doing it on your own could be more disastrous.  (e.g. crash of 2000.) 

So why is 'expert' in scare quotes?  Does he think those guys really don't know anything about finance?

Berns says his research highlights how we should pay more attention to financial advice and question the motives of so-called experts, assessing their trustworthiness before submitting to their opinion.

Of course: financial experts aren't dumb, they're corrupt.

The real brain glitch is the one that assumes that anything that is attached to money is corrupt.  Or, more precisely, we can best judge the truth by knowing a person's financial biases.

This is how the CNN piece ends:

"Frankly, we should have everyone in the finance industry submit to brain scans," he says.

Ha! That's hilarious, especially since it was the exact opposite of the point of his study-- wasn't it the people seeking advice that were the problem?  See how much fun it is to distort science, even good science that you yourself conducted and has value up until the "Discussion?"   Here, he flips it around to say that the problem is with the experts.  Which is, of course, what he wanted to be true all along.

I'll wager he would never put "neurology expert" in quotes, because he isn't tainted by money.  (Well, government money, but nihil obstat.)

Meanwhile, because he doesn't "make money" on his studies (which of course he does) we're supposed to assume this is pure science-- accept it at face value.  "Well, it uses MRIs." The MRIs are a rhetorical trick.  They make it so you don't notice the political/institutional/personal biases.  How much money a guy gets paid is all we need to know to judge his honesty.

"No, it's the source of the money that matters."  Oh.  If I do a study on Geodon that fails, I have to disclose if it was paid by Pfizer.  If I do a study on Geodon that fails and I am sleeping with the Lilly rep, I have to disclose if it was paid by Pfizer.  Solid.

It's a little scary to think that science can be used by scientists to reinforce a populist bias, but there you go.

------------

I'm on twitter

http://twitter.com/thelastpsych

if enough people sign up, I'll (try to) make it worth it. 






Comments

As soon as I saw this artic... (Below threshold)

March 30, 2009 2:54 PM | Posted by Kevin: | Reply

As soon as I saw this article on CNN I had a feeling it would show up on this blog sooner or later.

Your writing is affecting one person at least. As soon as I saw the study I starting asking myself things like, "What does the researcher want to be true here", etc, etc.

On an unrelated note: I still think the Latin phrases you drop into your posts obfuscate the ideas you're trying to get across.

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'nihil' means 'nothi... (Below threshold)

March 30, 2009 3:17 PM | Posted, in reply to Kevin's comment, by Anonymous: | Reply


'nihil' means 'nothing', like in 'nihilism'. 'stat' is probably the root of 'state' and 'statistic', roughly 'thing'. 'ob' means 'about', maybe? so 'nihil obstat' = 'not about this thing' or colloqually: 'that's different'.

Which make sense in context. Now I'll go look it up and see how close I was...

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hmm..okay, I was wrong and ... (Below threshold)

March 30, 2009 3:21 PM | Posted, in reply to Anonymous's comment, by Anonymous: | Reply

hmm..okay, I was wrong and I'll have to agree with Kevin. Not just because it was latin, but because it was used as a term of art.

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Enlightenment is man's emer... (Below threshold)

March 30, 2009 3:54 PM | Posted by PoliSciGuy: | Reply

Enlightenment is man's emergence from his self-imposed immaturity. Immaturity is the inability to use one's understanding without guidance from another. This immaturity is self-imposed when its cause lies not in lack of understanding, but in lack of resolve and courage to use it without guidance from another. Sapere Aude! [dare to know] "Have courage to use your own understanding!"--that is the motto of enlightenment.

Laziness and cowardice are the reasons why so great a proportion of men, long after nature has released them from alien guidance (natura-liter maiorennes), nonetheless gladly remain in lifelong immaturity, and why it is so easy for others to establish themselves as their guardians. It is so easy to be immature. If I have a book to serve as my understanding, a pastor to serve as my conscience, a physician to determine my diet for me, and so on, I need not exert myself at all. I need not think, if only I can pay: others will readily undertake the irksome work for me. The guardians who have so benevolently taken over the supervision of men have carefully seen to it that the far greatest part of them (including the entire fair sex) regard taking the step to maturity as very dangerous, not to mention difficult. Having first made their domestic livestock dumb, and having carefully made sure that these docile creatures will not take a single step without the go-cart to which they are harnessed, these guardians then show them the danger that threatens them, should they attempt to walk alone. Now this danger is not actually so great, for after falling a few times they would in the end certainly learn to walk; but an example of this kind makes men timid and usually frightens them out of all further attempts.

Thus, it is difficult for any individual man to work himself out of the immaturity that has all but become his nature. He has even become fond of this state and for the time being is actually incapable of using his own understanding, for no one has ever allowed him to attempt it. Rules and formulas, those mechanical aids to the rational use, or rather misuse, of his natural gifts, are the shackles of a permanent immaturity. Whoever threw them off would still make only an uncertain leap over the smallest ditch, since he is unaccustomed to this kind of free movement. Consequently, only a few have succeeded, by cultivating their own minds, in freeing themselves from immaturity and pursuing a secure course.

But that the public should enlighten itself is more likely; indeed, if it is only allowed freedom, enlightenment is almost inevitable. For even among the entrenched guardians of the great masses a few will always think for themselves, a few who, after having themselves thrown off the yoke of immaturity, will spread the spirit of a rational appreciation for both their own worth and for each person's calling to think for himself. But it should be particularly noted that if a public that was first placed in this yoke by the guardians is suitably aroused by some of those who are altogether incapable of enlightenment, it may force the guardians themselves to remain under the yoke--so pernicious is it to instill prejudices, for they finally take revenge upon their originators, or on their descendants. Thus a public can only attain enlightenment slowly. Perhaps a revolution can overthrow autocratic despotism and profiteering or power-grabbing oppression, but it can never truly reform a manner of thinking; instead, new prejudices, just like the old ones they replace, will serve as a leash for the great unthinking mass.

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Jeez, I forgot to mention t... (Below threshold)

March 30, 2009 3:55 PM | Posted, in reply to PoliSciGuy's comment, by Anonymous: | Reply

Jeez, I forgot to mention that this is Kant.

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I have to wonder how this w... (Below threshold)

March 30, 2009 4:07 PM | Posted by Anonymous: | Reply

I have to wonder how this whole experiment ever came to be. How was its premise framed in order to obtain funding? Was it meant to be a general take on people's credulity? Was it unknown until now that people are happy to fob off heavy lifting to someone else?

As interpreted, the study only shows how people compensate for experts. We need a study showing that we'll try cigarettes if the cool kids are doing it, or buy a $250K starter home if most of our amateur friends did.

Hopefully, this will motivate people to challenge the wisdom of their dentists and lawyers, who are equally poisoned by the promise of profit. If election years can make us all experts in economics and world affairs, what's hard about teeth and contracts?

Anyway, glad someone finally sorted out the source of the current problem. I knew it was something.

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I'm tempted to sign up for ... (Below threshold)

March 30, 2009 4:07 PM | Posted by Fargo: | Reply

I'm tempted to sign up for twitter just to see what your less filtered thoughts are like. In my imagination it involves which dino-pony was the cutest, Duran Duran lyrics, and how many successive shots of bourbon it takes to kill a kidney.

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What are you supposed to do... (Below threshold)

March 30, 2009 4:22 PM | Posted by Anonymous: | Reply

What are you supposed to do when 2 different experts (at the same level of 'expertness') give totally different advice?

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It's a little scary to t... (Below threshold)

March 30, 2009 5:03 PM | Posted by Anonymous: | Reply

It's a little scary to think that science can be used by scientists to reinforce a populist bias, but there you go.

It makes me wonder if there exist genuinely novel and objective studies, but because they don't have a ready mental handle and interpretation for the audience, they gather dust. It seems to matter what the field is.

Studies in material engineering or drug resistance are doomed to fly under the radar, but they have a specific audience. If your field is too abstract to have utilitarian value, who else is your audience?

The very fact that a study has made it to popular press seems indicative of its designs.

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please install facebook wid... (Below threshold)

March 30, 2009 6:36 PM | Posted by Fbiij: | Reply

please install facebook widget

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It's a little s... (Below threshold)

March 30, 2009 7:16 PM | Posted by aaron Davies: | Reply

It's a little scary to think that science can be used by scientists to reinforce a populist bias, but there you go.

the word you're looking for is lysenkoism

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Nihil Obstat is more... (Below threshold)

March 31, 2009 12:32 AM | Posted, in reply to Kevin's comment, by Anonymous: | Reply

Nihil Obstat is more of a religious reference than a latin one, really.

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The point of havin... (Below threshold)

March 31, 2009 8:38 AM | Posted by Matt P: | Reply

The point of having an expert is to trust his judgment. If your judgment is nearly as good as his, than either he's not an expert, or you are.

Looking over the actual study, that looks like the researcher's point as well. The "experts" in the experimental setting were intentionally giving bad advice, thus the scare-quotes. They weren't really experts, they were just pretending to be.

The study seems to be saying that people don't separate the experts from the "experts" when evaluating advice. There's no irony here; the researcher shows his work so that a reader can make an informed decision over whether he is an expert or an "expert".

So, no, the researcher isn't "saying we shouldn't listen to experts." He's saying that we should do our due diligence in making sure that someone presenting himself as an expert is actually an expert. (Note that the study was designed to show that the "experts" would be revealed as unreliable if the advisees asked enough probing questions.)

With your frequent focus on narcissists, I'm kind of surprised to see you suggesting we should take people at their word when they call themselves experts. :)

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"What are you supposed to d... (Below threshold)

March 31, 2009 9:18 AM | Posted by Anonymous: | Reply

"What are you supposed to do when 2 different experts (at the same level of 'expertness') give totally different advice?"

This is actually the current status quo regarding evidence in many medical topics.

Oh, wait - I used Latin - let me rephrase that -

This is actually the current state of affairs regarding evidence in many medical topics. The most recent story I saw found no superiority for drug-eluding stents. We recently had a story about medical management of heart disease versus surgical intervention: no diff.

Depression treatment: if you don't get better, why continue treatment? Talk therapy has far superior evidence, and no suicidal side effects, but largely, people take pills.

Lower back pain: 50% of surgeries are successful. (I suspect heavy placebo effect, combined with the concomitant benefit from follow-up physical therapy, plus rest).Physical therapy has a higher success rate. But back surgeries get promoted.

Knee arthroscopy for knee pain: ineffective. Yet plenty of experts will urge you to have it done.

Episiotomies: not supported by the evidence. Yet still done widely.

HRT for protecting cardiac health. Oh, wait - it leads to heart disease. and cancers. Sorry about that one.

Multivitamins to extend life: oh, wait, they don't. And they may lead to cancer. Dr. Weil is still out there as the expert, selling vitamins.

Antioxidants to prevent cancer. Everything in the grocery store is labeled "antioxidant." Fortunately, the doses are low in my tea and my Caprisun, because antioxindants seem to cause cancer.

Glucosamine and chondrointin for joint health/joint pain: many devotees, skimpy evidence.

Older adults should especially get the flu vaccine! Welll, except that it does not seem to work for the elderly, since their immune systems don't seem to generate the antibodies sufficiently. Nonetheless, this fall we will be hammered with the messages to jab the old folks yet again.

Antibiotics rx all over the place for upper respiratory infection. They don't work.

C-sections: still drastically over-performed, despite a great deal of study and education. This was just in the medical news again the other day.

The list goes on and on.

In medical care, there is a great deal of mixed evidence, or a difference between common knowledge/common practice and evidence.

Bottom line: even if someone is a bona fide expert...

Oh, wait - I used Latin again -sorry-

Even if someone is really, really, an expert, you still should not blindly follow the expert, but use your own head, look at evidence, etc.

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"What are you supposed to d... (Below threshold)

March 31, 2009 9:28 AM | Posted by MedsVsTherapy: | Reply

"What are you supposed to do when 2 different experts (at the same level of 'expertness') give totally different advice?"

This is actually the current status quo regarding evidence in many medical topics.

Oh, wait - I used Latin - let me rephrase that -

This is actually the current state of affairs regarding evidence in many medical topics. The most recent story I saw found no superiority for drug-eluding stents. We recently had a story about medical management of heart disease versus surgical intervention: no diff.

Depression treatment: if you don't get better, why continue treatment? Talk therapy has far superior evidence, and no suicidal side effects, but largely, people take pills.

Lower back pain: 50% of surgeries are successful. (I suspect heavy placebo effect, combined with the concomitant benefit from follow-up physical therapy, plus rest).Physical therapy has a higher success rate. But back surgeries get promoted.

Knee arthroscopy for knee pain: ineffective. Yet plenty of experts will urge you to have it done.

Episiotomies: not supported by the evidence. Yet still done widely.

HRT for protecting cardiac health. Oh, wait - it leads to heart disease. and cancers. Sorry about that one.

Multivitamins to extend life: oh, wait, they don't. And they may lead to cancer. Dr. Weil is still out there as the expert, selling vitamins.

Antioxidants to prevent cancer. Everything in the grocery store is labeled "antioxidant." Fortunately, the doses are low in my tea and my Caprisun, because antioxindants seem to cause cancer.

Glucosamine and chondrointin for joint health/joint pain: many devotees, skimpy evidence.

Older adults should especially get the flu vaccine! Welll, except that it does not seem to work for the elderly, since their immune systems don't seem to generate the antibodies sufficiently. Nonetheless, this fall we will be hammered with the messages to jab the old folks yet again.

Antibiotics rx all over the place for upper respiratory infection. They don't work.

C-sections: still drastically over-performed, despite a great deal of study and education. This was just in the medical news again the other day.

Nebulizer and corticosteroids for bronchiolytis in babies: 1. doesn't work per AAPediatricians guidelines; 2. my pediatrician rx this nonetheless (she is a harvard grad and a fellow of the am academy of pediatricians, thus an expert) 3. i have moved on to a new pediatrician.

The list goes on and on.

In medical care, there is a great deal of mixed evidence, or a difference between common knowledge/common practice and evidence.

Bottom line: even if someone is a bona fide expert...

Oh, wait - I used Latin again -sorry-

Even if someone is really, really, an expert, you still should not blindly follow the expert, but use your own head, look at evidence, etc.

Oh - this reminds me - the other day, I saw a website noting freakish accidents and death - including a GPS category: people are apparently driving into flooded creeks, driving onto train tracks with oncoming trains, etc. because the GPS thingie is telling them to drive this way or that way. Google "GPS" and "accident" and you will discover many.

This makes me suspect that we generally may be predisposed to hand over our common sense (and money and life) to anyone or anything - not just to a self-proclaimed expert.

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I find myself agreeing with... (Below threshold)

March 31, 2009 11:39 AM | Posted by David Johnson: | Reply

I find myself agreeing with the conclusions medsvstherapy makes. It's more difficult to think than not, more difficult to think critically, more difficult to maintain awareness than zone out. Experts are parental surrogates. Machines can perform in the same capacity. Much of TV dispenses the mindless pablum or mother's milk of distraction/fulfillment with minimal user input.

God forbid any of this should contribute to Alone's fear of populism. See Culberson for succor: http://books.google.com/books?id=Wmcrzd0kVAwC&pg=PA88&lpg=PA88&dq=%22fear+of+populism%22&source=bl&ots=Rx0Rz4DNMe&sig=FSlN5fim_zrOyVZImKSCmc__SSA&hl=en&ei=FTfSScuyIaDqtQO5tYzMAw&sa=X&oi=book_result&resnum=3&ct=result#PPA89,M1.

Finally, I'm not sure we need look at financial advisors as "dumb" or "corrupt-" many times they can be and are both. Think of used-car salesmen for context. Note that used car salesmen have a better record than financial advisors and perpetuate far less financial loss.

How do I know this? I'm an "expert."

Note: No latin was harmed in this post.

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One financial expert advise... (Below threshold)

March 31, 2009 10:41 PM | Posted by information addict: | Reply

One financial expert advises to diversify your investments. I think its a good idea to diversify your financial advisor experts...and make sure they don't all use the same strategy...don't put all your eggs in one basket and look under the hood for yourself...but read the instruction manual first.

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Oh no!!! Not twitter! Not h... (Below threshold)

April 1, 2009 1:22 AM | Posted by STOpandthink: | Reply

Oh no!!! Not twitter! Not here! Please...

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Why, War, of course.... (Below threshold)

April 1, 2009 8:20 PM | Posted, in reply to Anonymous's comment, by xon: | Reply

Why, War, of course.

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<a href="http://www.watches... (Below threshold)

July 26, 2009 3:34 AM | Posted by zengxin: | Reply

Panerai Watches

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So true. I can't help but ... (Below threshold)

December 19, 2009 11:10 AM | Posted, in reply to MedsVsTherapy's comment, by Anonymous: | Reply

So true. I can't help but think about the butlerian Jihad (it's in the Dune series) where people essentially had turned their lives over to AIs (it was the far future, so they were really really smart AIs) and eventually were literally enslaved by these machines for thousands of years. We are slowly doing the same thing -- in global warming (but the computer models say), in medicine (experts say), in politics (but my favorite pundit says), and in finances. We don't need to worry just about the death of psychatry -- I think it's a symptom, not a cause -- but it's the same thing as all of the other spheres of our lives. Let someone else decide.

That's almost scary to me. We've collectively come to the conclusion that we cannot make our own decisions. We look to experts to feed and dress us, to take care of our moods, to tell us what kind of lightbulbs to use, to tell us how to vote, to tell us how to have fun, to tell us how to raise our kids, all of it is decided by someone else. I think this might also somewhat cause depression. If you're literally incompetant to do even the smallest things for yourself, why WOULDN'T you be depressed?

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Every one acknowledges that... (Below threshold)

October 22, 2011 6:40 AM | Posted by TammieMcintosh34: | Reply

Every one acknowledges that humen's life is very expensive, but people need cash for different stuff and not every person gets big sums money. Thus to receive fast home loans and financial loan will be a correct way out.

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